NEW YORK (AP) - Media and entertainment company CBS Corp. is buying CNet
Networks Inc., an online news and information provider, for $1.8 billion in cash
in its latest bid to expand its reach on the Internet, the companies announced
Thursday.
The price of $11.50 per share for CNet represents a massive premium of 45
percent over CNet's closing stock price on Wednesday, and appears to get CNet
out of a nasty battle with one of its largest shareholders, which had been
agitating for a shakeup at the company after its stock slumped.
CNet shares soared $3.34, or 43 percent, to 11.34 in premarket trading.
CBS's CEO Leslie Moonves told reporters on a conference call that acquiring
access to CNet's large online audience in order to distribute media content from
CBS was "a large part" of CBS' motivation in going after the San Francisco-based
online company.
"Our idea is to have our content wherever, whenever you can get it, and
adding CNet just makes that happen faster," Moonves said.
Despite the high premium CBS is paying for CNet, CBS's chief financial
officer Fred Reynolds called the price "fair" said the acquisition would
immediately add to CBS's earnings. CBS will fund the acquisition with cash on
hand.
CNet is an early pioneer in the Internet, and now includes a large stable of
businesses in the entertainment, news and music areas such as ZDNet,
GameSpot.com, TV.com, mp3.com.
Moonves said he saw opportunities for distributing CBS news, music and other
content on CNet's online outlets, and also for tapping CNet's significant online
advertising sales operation to boost over ad growth for the media company.
CBS has been aggressive in finding new online outlets for its entertainment
programming as more people shift their media consumption from traditional
outlets like TV and radio to the Internet.
CBS online properties include CBS.com, CBSSports.com and CBSNews.com.
The acquisition, expected to close in the third quarter after shareholder
and regulatory approval, would make CBS one of the 10 most popular Internet
companies in the U.S., with 54 million unique visitors a month and approximately
200 million uses worldwide, CBS said.
CBS, which is also a major radio broadcaster, inked a deal in March to
provide audio programming from all 140 of its radio stations to Time Warner
Inc.'s AOL music service.
A group of investors led by New York hedge fund Jana Partners LLC has been
agitating for a shake-up at CNet after its shares fell sharply in the past year.
Jana Partners has led a proxy fight to get a slate of directors elected to the
CNet board.
The investors say CNet's management has failed to take advantage of the
company's online presence to grow revenue as quickly as the advertising market
is increasing.
A Jana Partners spokesman said the company did not have a comment yet on the
CBS bid.
CNet recently reported a narrower first-quarter loss and said revenue grew
by 2.6 percent to $91.4 million.
CNet shares jumped 43 percent to $11.34 in electronic premarket trading
while CBS shares slipped 12 cents to $24.70.
AP Business Writer Seth Sutel in New York contributed to this report.
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